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How to Read Southern Company’s Power Plant Plight

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Part 4
How to Read Southern Company’s Power Plant Plight PART 4 OF 4

Behind Southern Company’s Price Targets: The Analysts’ View

SO’s price targets

According to the latest Wall Street analyst estimates, Southern Company (SO) is expected to have an upside of 3% going forward. Analysts have given the stock a mean price target of $51.03, compared with its current market price of $49.56.

Of the 19 analysts tracking Southern Company, one analyst recommends the stock as a “strong buy,” while four recommend it for a “buy.” Notably, 11 analysts are recommending a “hold,” while just one recommends a “sell,” and two actually recommend a “strong sell.”

Behind Southern Company’s Price Targets: The Analysts&#8217; View

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Investment banking firm Jefferies has a “buy” rating on Southern Company stock and raised its price target from $55.0 to $56.5 on September 12, 2017. Last week, Mizuho Securities upgraded Southern Company stock to “buy” from “neutral.”

Peer PPL Corporation (PPL) has a mean price target of $39.92, compared with its current market price of $39.07. This indicates a possible gain of 2.2%.

Xcel Energy (XEL) stock has an estimated loss of 4% over the next year. It has a mean price target of $47.67, and it’s currently trading at $49.53.

Outlook

Southern Company’s power plant woes could continue to impact its stock performance in the short term. On a positive note, the stock is trading at a relatively fairer valuation compared to peers. At 4.8%, it’s the highest-yielding stock among the top utility stocks (XLU).

Southern Company’s management expects its earnings and dividend growth to remain shielded from the company’s power plant hitches. It might surprise investors that Southern Company still sees value in continuing the construction of the Vogtle nuclear power plant.

To learn more about how nuclear generation in the US is struggling, read Market Realist’s “Why US Nuclear Power Generation Is under Serious Threat.”

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